Spending authority was set to expire at midnight, putting non-essential government services at risk of closure until an agreement is reached on a continuing resolution or a budget deal is struck.
At the close Monday, the Dow Jones industrial average was off 128.57 points or 0.84 percent to 15,129.67. The Standard & Poor's 500 closed with a loss of 10.20 points or 0.6 percent to 1,681.55. The Nasdaq slid 0.27 percent, dropping 10.12 points to 3,771.48.
On the New York Stock Exchange, 1,237 issues advanced while 1,830 declined on volume of 3.3 billion shares.
The 10-year U.S. treasury note gained 4/32 to yield 2.611 percent.
On foreign markets, the Japanese Nikkei 225 shed 304.27 points or 2 percent to 14,455.80. The Hang Sent index in Hong Kong gave up 1.5 percent or 347.18 points to 22,859.86. In Europe, the London FTSE shed 50.44 points or 0.77 percent to 6,462.22 while the German DAX lost 67.11 or 0.77 percent to 8,594.40 and the French CAC was off 1 percent, losing 43.44 points, to 4,143.44.
On currency markets, the euro fell to $1.3527 and the dollar rose to 98.30 yen.
Crude oil lost 59 cents to $102.28 on the New York Mercantile Exchange. On the Comex division, gold gave up $10.40 to $1,328.80 per troy ounce while silver lost 12.1 cents to $21.71.
On the Chicago Board of Trade, December corn lost 13 cents to $4.41 a bushel, November soybeans gave up 38 1/2 cents to $12.81 1/4, and December wheat lost 5 cents to $6.78.
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